African Cellular Towers' (ACT's) revenue for the interim period ended 31 August 2011 rose to R109.2 million from R102.7 million in the same period last year.
In a statement on its interim results, the company also said its gross loss narrowed to R18.4 million from a previous loss of R23.4 million.
“Trading loss decreased to R47.6 million (loss of R70.6 million), while loss before interest, tax, depreciation and amortisation (EBITDA) lessened to R49.5 million (loss of R85.4 million).”
A loss attributable to ordinary shareholders of the company was recorded at R54.8 million.
This comes after the company lost half its value on the JSE in November, when it issued a negative trading update and said it was in talks over its ability to continue as a going concern.
ACT was established in 1999 and has three business units: power lines, cellular towers and equipment shelters.
No dividend
It said that, in line with group policy and having regard to the loss incurred, the group will not pay a dividend for the interim period ended 31 August 2011.
“The outlook for ACTowers is strained by the inability to secure sustainable long-term contracts within the power lines industry, the depressed trading environment, as well as the working capital constraints being experienced by the group.”
The company also said that although the size of the transmission and distribution market is well documented, unless there is a marked improvement in trading conditions in the short to medium term for the Power Lines Division, coupled with the successful restructuring of existing funding facilities and/or conclusion of an equity transaction with a strategic equity partner to recapitalise the business, the group may face some tough decisions pertaining to the business as a whole.
“ACTowers is still facing a variety of challenges and all efforts are being made by management to find a strategy that will protect shareholder value.”
ACT is experiencing a general improvement in its cellular division, and the manufacturing division has seen a marked improvement in the number of third-party orders, specifically in power line manufacturing and substation steel.
“The prospects for this division have further been boosted by the announcement that power line towers are now categorised as a designated product and that power line towers will have to be secured in South Africa instead of being imported.”
However, the company last week issued the renewal of its cautionary announcement. It advised shareholders that funding requirements are not yet finalised.
“Shareholders are, however, advised that ACTowers has entered into discussions with a third party, and accordingly, shareholders are advised to exercise caution when dealing in their shares on the JSE until a further announcement is made.”
Depressing trade
ACT said that, despite the group undertaking an extensive turnaround process since May 2010 and debt funding secured from the Industrial Development Corporation (IDC) to the amount of R99 million in March 2011, macro-economic factors and continued depressed trading conditions negatively impacted the group's results.
“Although ACTowers reports a slight improvement, the results unfortunately did not meet the board's expectations.”
The group is currently implementing various restructuring options in order to restore the company to profitability.
“Should these options not be successfully concluded, there will be material uncertainty created with regards to its going concern status.”
The company's report of a loss and headline loss per share for the first half of the year represents the fifth consecutive period it will not have made a profit.
Absa investment analyst Chris Gilmour previously said discussions about ACT's going concern status do not sound good. “My interpretation is that it is in deep trouble and may struggle to keep going.”
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